UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
November 30, 2012
Date of Report (Date of earliest event reported)   

Commission File No. 000-32037
 
GENESIS GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
65-0108171
(State or other jurisdiction of incorporation)
 
(IRS Employer Identification No.)
 
 
2500 North Military Trail, Suite 275, Boca Raton, FL 33431
(Address of principal executive offices, Zip Code)
 
(561) 988-1988
Registrant’s telephone number, including area code   
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 3.02    Unregistered Sales of Equity Securities.

On November 30, 2012, ADEX Corporation (“ADEX”), a wholly owned subsidiary of Genesis Group Holdings, Inc. (“Genesis”), entered into an Equity Purchase Agreement (the “Agreement”) with Environmental Remediation and Financial Services LLC, a New Jersey limited liability company (“ERFS”), and Mark Vigneri, sole member of ERFS. Under the terms of the Agreement, ADEX will acquire the outstanding membership interests in ERFS in exchange for shares of Series I Preferred Stock of Genesis (“Series I Preferred”).

A Certificate of Designation, Preferences, and Rights of Series I Preferred Stock of Genesis Group Holdings, Inc. (“Series I Certificate of Designation”) designating 4,500 shares of Series I Preferred is expected to be filed with the Delaware Secretary of State on or around December 6, 2012.

Under the terms of the Series I Certificate of Designation, the holders of Series I Preferred will have the right, beginning on the earlier of (i) 30 days after the closing of an underwritten public offering of shares of Genesis’s common stock (the “Common Stock”) pursuant to an S-1 Registration Statement which has been filed with and declared effective by the U.S. Securities and Exchange Commission (the “S-1 Closing Date”) and (ii) 120 days after issuance, to convert into a number of shares of Common Stock equal to $1,000 per share of Series I Preferred (subject to adjustment for subdivisions or combinations of the Series I Preferred) (the “Liquidation Value”) divided by the Conversion Price (as adjusted for stock splits, stock dividends, recapitalizations and the like). The Conversion Price shall be (i) if the Common Stock is then traded on a national securities exchange or over-the-counter, the average of the last reported sale price of the Common Stock for each of the three trading days prior to the date of conversion (or, if there is no such reported last sale price, the last reported bid price on such date) and (ii) if the Common Stock is not then traded on a national securities exchange or over-the-counter, the fair market value of a share of Common Stock on the date of conversion as determined in good faith by the Board of Directors of Genesis.

Subject to the terms of the Series I Certificate of Designation, the holders of Series I Preferred may request that Genesis redeem shares of Series I Preferred at a price per share equal to the Liquidation Value beginning 30 days after the S-1 Closing Date. The total aggregate amount Genesis is obligated to pay to redeem Series I Preferred is $750,000.  After this aggregate amount has been paid, any remaining outstanding shares of Series I Preferred shall not be redeemable.

Upon a sale, liquidation, dissolution or winding up of Genesis, the holders of Series I Preferred will be entitled to the Liquidation Value after distribution to shares of Genesis capital stock with a senior liquidation preference.

The form of the Series I Certificate of Designation is filed as Exhibit 3.1 hereto, and the above description of the material terms of the Series I Preferred are qualified in their entirety by the Series I Certificate of Designation.

Genesis expects to issue up to an aggregate of 4,500 shares of Series I Preferred under the Agreement. The issuance of the Series I Preferred pursuant to the Agreement is expected to be exempt from registration in reliance on an exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) as a transaction by Genesis not involving a public offering.  Neither the Series I Preferred nor the underlying common stock issuable upon conversion of the Series I Preferred have been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Item 3.03     Material Modification to Rights of Security Holders.

The information provided under Item 3.02 in this Current Report on Form 8-K regarding the Series I Preferred is incorporated by reference into this Item 3.03.
 
 
 
 
 
Item 5.02     Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 4, 2012, Dan Sullivan resigned as a member of the Genesis Board of Directors.

On December 4, 2012, the Board of Directors of Genesis appointed Mark Durfee and Neal Oristano as members of the Board of Directors (the “Board”), effective December 4, 2012, to fill two vacancies on the Board. Genesis currently anticipates that Mr. Durfee and Mr. Oristano will serve on Genesis’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, when those committees are formed.  Genesis anticipates entering into Indemnification Agreements with Mr. Durfee and Mr. Oristano. It is also anticipated that Mr. Durfee and Mr. Oristano will be compensated in accordance with Genesis’s compensation policy for non-employee directors.
 
Item 9.01     Financial Statements and Exhibits.

(d)   Exhibits.

Exhibit Number
 
Description
   
3.1
 
Series I Certificate of Designation
 
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: December 6, 2012
 
GENESIS GROUP HOLDINGS, INC.
   
By:
/s/ Mark Munro
 
Name:  Mark Munro
Title:Chief Executive Officer

 
 
 

 
EXHIBIT INDEX

Exhibit Number
 
Description
   
3.1
 
Series I Certificate of Designation

Exhibit 3.1
 
 
CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS OF
 
SERIES I PREFERRED STOCK OF GENESIS GROUP HOLDINGS, INC.
 
Pursuant to Section 151 of the General Corporation Law of the State of Delaware, the undersigned Secretary of GENESIS GROUP HOLDINGS, INC. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY that pursuant to the authority contained in the Corporation’s Certificate of Incorporation, as amended, and in accordance with the provisions of the resolution creating a series of the class of the Corporation’s authorized Preferred Stock as designated as Series I Preferred Stock as follows:
 
FIRST :  The Certificate of Incorporation, as amended, of the Corporation authorizes the issuance of 500,000,000 shares of common stock, $0.0001 par value per share, and 50,000,000 shares of preferred stock, par value $0.0001 per share, and further authorizes the Board of Directors of the Corporation, by resolution or resolutions, at any time and from time to time, to divide and establish any or all of the unissued shares of preferred stock not then allocated to any series into one or more and , without limiting the generality of the foregoing, to fix and determine the designation of each such share, the number of shares which shall constitute such and certain preferences, limitations and relative rights of the shares of each series so established.
 
SECOND :  By unanimous written consent of the Board of Directors of the Corporation dated December __, 2012, the Board of Directors have designated 4,500 shares of the preferred stock as Series I Preferred Stock. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of the Series I Preferred Stock shall be as hereinafter described.
 
THIRD :  Article Fourth of the Certificate of Incorporation of the Corporation is amended to include the following:
 
Series I Preferred Stock
 
The Corporation shall designate a series of preferred stock, consisting of 4,500 shares, as Series I  Preferred Stock (the “Series I”) which shall have the following designations, rights and preferences:
 
1.              Dividends . The holders of Series I  shall not be entitled to receive any dividends, including cumulative dividends, with respect to the shares of Series I.
 
2.              Conversion . The holders of Series I shall have the right, beginning thirty (30) days after the closing of an underwritten public offering of shares of Common Stock pursuant to an S-1 Registration Statement which has been filed with and declared effective by the U.S. Securities and Exchange Commission (the “S-1 Closing Date”), or one hundred twenty (120) days after issuance (whichever is earlier) to convert same into the Corporation Common Stock, par value $0.0001 per share (the “Common Stock”). The conversion shall be into such number of shares of Common Stock equal to the Liquidation Preference Price of the Series I shares at the time of conversion divided by the Conversion Price (as adjusted for stock splits, stock dividends, recapitalizations and the like). The Conversion Price shall be (i) if the Common Stock is then traded on a national securities exchange or over-the-counter, the average of the last reported sale price of the Common Stock for each of the three trading days prior to the Conversion Date (or, if there is no such reported last sale price, the last reported bid price on such date) and (ii) if the Common Stock is not then traded on a national securities exchange or over-the-counter, the fair market value of a share of Common Stock on the Conversion Date as determined in good faith by the Board of Directors.
 
 
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a.             Mechanics of Conversion . The conversion of the shares of the Series I shall be conducted in the following manner:
 
i.           Holder’s Delivery Requirements . To convert the shares of the Series I into shares of Common Stock on any date (the “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver) for receipt on or prior to 11:59 p.m., Eastern Standard Time on such date, a copy of a fully executed notice of conversion (the “Conversion Notice”) to the Corporation’s designated transfer agent (the “Transfer Agent”) with a copy thereto to the Corporation and (b) surrender to a common carrier for delivery to the Transfer Agent at such time the original certificates representing the shares of the Series I being converted (or a letter attesting to their loss, theft or destruction with respect to such shares in the case of their loss, theft or destruction) (the “Series I Certificate”), duly endorsed for transfer.
 
ii.          Corporation’s Response . Upon receipt by the Corporation of a copy of the Conversion Notice, the Corporation shall immediately send, via facsimile, a confirmation of receipt of such Conversion Notice to the Holder and the Transfer Agent, which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. Upon receipt by the Transfer Agent of the Series I Certificates to be converted pursuant to the Conversion Notice, the Transfer Agent shall, on the next business day following the date of receipt (or the second business day following the date of receipt if received after 11:00 a.m. local time of the Transfer Agent), issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate registered in the name of the Holder or its designee for a number of shares of Common Stock to which the Holder shall be entitled. If the number of the shares of the Series I represented by the Series I Certificate(s) submitted for conversion is greater than the number of Preferred Stock being converted, then the Transfer Agent shall, as soon as practicable and in no event later than three (3) business days after receipt of the Series I Certificate(s), issue and deliver to the Holder a new Series I Certificate representing the number of the shares of the Series I not converted.
 
iii.          Record Holder . The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of the shares of the Series I shall be treated for all purposes as the record holder of such shares of Common Stock on the Conversion Date.
 
b.              Taxes . The Corporation shall pay any and all taxes that may be payable with respect to the issuance and delivery of the Common Stock upon the conversion of the shares of the Series I.
 
 
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3.             Redemption . The shares of the Series I are not redeemable except as set forth in this Section 3. At the individual option of each Holder of shares of the Series I, the Series I shall be redeemable for a period beginning on the 31st day following  the S-1 Closing Date and ending at such time that the Corporation has redeemed shares of Series I for an aggregate amount of $750,000, the Corporation shall redeem the number of shares of the Series I that is specified in a request for redemption delivered to the Corporation by such Holder by paying the Liquidation Preference Price (as hereinafter defined) per share of the Series I to be redeemed ; provided, however , that if the Corporation is prohibited under the Delaware Business Corporations Act or other applicable law from the shares of the Series I for which redemption is required hereunder, then it shall first redeem such shares on a pro rata basis among the Holders in proportion to the full respective redemption amounts to which they are entitled hereunder to the extent that the Corporation is not so legally prohibited from doing so and shall redeem the remaining shares to be redeemed as soon as the Corporation is not so legally prohibited from doing so. The date of redemption maybe extended by the Corporation for 180 additional days, at the Corporation’s option by delivering written Notice to the holders of Series I and providing additional consideration therefore at a rate 1% per month until redeemed.  On the requested date of redemption (which shall be no sooner than 30 days from the date of delivery of the redemption request to the Corporation) as specified in the Holder’s notice, the Holder shall surrender to the Corporation his certificate for the shares of the Series I to be redeemed and the Corporation shall pay to such Holder the redemption price therefor in immediately available funds. In the case of a partial redemption, the Corporation will issue a new certificate to the Holder representing the balance of the unredeemed Series I shares. In the event any shares of the Series I shall be redeemed pursuant to this section, the shares so redeemed shall automatically be cancelled and returned to the status of authorized but unissued shares of preferred stock. The Series I will no longer be redeemable once the Corporation has redeemed shares of Series I for an aggregate amount of $750,000.
 
4.              Voting Rights . Each share of the Series I shall entitle the Holder thereof to one vote for each share of Common Stock into which their shares of the Series I could be converted pursuant to the Conversion Ratio on the record date for determining stockholders entitled to vote or consent, and with respect to such vote, shall be entitled to notice of any stockholders’ meeting in accordance with the by-laws of the Corporation, and shall be entitled to vote, together as a single class with holders of Common Stock and any other series of preferred stock then outstanding, with respect to any question or matter upon which holders of Common Stock have the right to vote. The shares of the Series I shall also entitle the Holders thereof to vote the shares as a separate class as set forth herein and as required by law. In the event of any stock split, stock dividend or reclassification of the Corporation’s Common Stock, the number of votes which attach to each share of the Series I shall be adjusted in the same proportion as any adjustment to the number of outstanding shares of Common Stock.
 
 
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5.              Liquidation, Dissolution, Winding-Up . Upon any Sale, liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Holders of the shares of the Series I shall be entitled, after any distribution or payment is made upon any shares of capital stock of the Corporation having a liquidation preference senior to the Series I but before any distribution or payment is made upon any shares of Common Stock or other capital stock of the Corporation having a liquidation preference junior to the Series I, to be paid in cash the sum of $1000.00 per share, subject to appropriate adjustments for subdivisions or combinations of the outstanding shares of the Series I effected after the date hereof (the “Liquidation Preference Price”). If upon such liquidation, dissolution or winding up, the assets to be distributed among the Series I Holders and all other shares of capital stock of the Corporation having the same liquidation preference as the Series I shall be insufficient to permit payment to said holders of such amounts, then all of the assets of the Corporation then remaining shall be distributed ratably among the Series I Holders and such other capital stock of the Corporation having the same liquidation preference as the Series I, if any. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after provision is made for Series I Holders and all other shares of capital stock of the Corporation having the same liquidation preference as the Series I, if any, then-outstanding as provided above, the holders of Common Stock and other capital stock of the Corporation having a liquidation preference junior to the Series I shall be entitled to receive ratably all remaining assets of the Corporation to be distributed. If assets other than cash are distributed pursuant to this Section,   the valuation of such assets will be made by the Board of Directors acting in good faith. For purposes hereof, “Sale” means (i) any acquisition of the Corporation by means of merger or other form of corporate reorganization in which outstanding shares of the Corporation are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its subsidiary (other than a mere reincorporation transaction) and pursuant to which the holders of the outstanding voting securities of the Corporation immediately prior to such merger or other form of corporate reorganization fail to hold equity securities representing a majority of the voting power of the Corporation or surviving entity immediately following such merger or other form of corporate reorganization or (ii) a sale of all or substantially all of the assets of the Corporation.  Holders of a majority of the then outstanding shares of Series I, voting together as a separate class, may by vote or written consent waive the treatment of any transaction as a “Sale.”
 
6.              Protective Provisions . So long as any shares of the Series I are outstanding, this Corporation shall not, without first obtaining the written approval of a majority of the holders of Series I stock, amend its Certificate of Incorporation to (i) alter or change the rights, preferences or privileges of the Series I, (ii) alter or change the powers, preferences or rights of the Series I, or the qualifications, limitations or restrictions thereof, if any such alteration or change would adversely affect the rights of the Series I Holders. Notwithstanding the foregoing, the Corporation may issue without approval of the Series I Holders, new classes or series of preferred stock.
 
7.              Reservation of Common Stock . The Corporation will at all times reserve and keep available out of its authorized but unissued shares of Common Stock or its treasury shares of Common Stock, solely for the purpose of issuance upon the conversion of the Series I, the maximum number of shares of Common Stock as then could be issuable upon the conversion of all then outstanding shares of the Series I. All shares of Common Stock which are issuable upon conversion of the Series I in accordance with this Certificate of Designation will, when so issued, be duly authorized, validly issued, fully paid and non-assessable. The Corporation will take all action that may be necessary to assure that all shares of Common Stock issuable upon such conversion may be so issued without violation of any law, regulation or agreement applicable to the Corporation.
 
8.              Fractional Shares . No fractional shares shall be issued upon the conversion of any share or shares of the Series I. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of the Series I by a Holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the value of such fraction on the Conversion Date (based on the Conversion Price).
 
 
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9.              Registration Rights . Holders of Series I shall not have registration rights.
 
10.            No Preemptive Rights . No Series I Holder shall be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class.
 
11.            Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief),  no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy, and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation.
 
12.           Charges . The issuance of certificates representing Common Stock upon conversion of the Series I as hereinabove set forth shall be made without charge for any expense or issuance tax in respect thereof, provided that the Corporation shall not be required to pay any taxes which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of shares converted.
 
13.           Specific Shall Not Limit General . No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein.
 
 
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IN WITNESS WHEREOF , the Corporation has caused this Certificate of Designation to be duly executed by its Corporate Secretary as of this __ day of December 2012.
 
  GENESIS GROUP HOLDINGS, INC.
 
By:                                                                               
Name:  Lawrence M. Sands
Title:    Corporate Secretary
 
 
 
 
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